Botswana has signed a new diamond sales agreement with De Beers, enhancing its share of diamond sales through Debswana from 25% to 30%. The 10-year deal introduces a potential equal split of sales after an extension. The partnership is pivotal as Botswana seeks to stabilize its economy, heavily reliant on diamond exports, amidst declining demand and prices.
The Botswana government has ratified a new diamond sales agreement with De Beers, following seven years of negotiations. This deal is vital for Botswana’s economy, enhancing the government’s share of diamond sales via Debswana, a joint venture with De Beers, a subsidiary of Anglo American.
Under the new terms of the 10-year agreement, Botswana’s share will rise to 30% in the first five years, then to 40% in the subsequent five years. There is also an option for a five-year extension that could establish an equal 50-50 split in sales. In return, De Beers secured a 25-year extension on its mining licenses in Botswana, from 2029 to 2054.
Botswana, renowned as the largest diamond producer by value, relies heavily on diamond-related revenues, which represent about 80% of its exports, and a quarter of its GDP. However, demand for diamonds has decreased, causing significant economic challenges that contributed to the ruling party’s unexpected electoral defeat last year.
During the contract signing ceremony, President Duma Boko emphasized the importance of sustainable partnerships, declaring, “We are people of durable relationships. We have us a good deal and we trust that it will carry us into the future.”
Botswana has produced some of the largest diamonds globally in recent years, including a record 2,492-carat diamond discovered in 2022 by a Canadian firm. However, Debswana’s total sales have plummeted, with first nine months of 2024 sales dropping over 50% compared to the previous year, highlighting the economic vulnerability tied to diamond reliance.
The agreement represents a significant step for Botswana, aiming to stabilize its economy amid fluctuating diamond prices. The increase in the government’s stake reflects an effort to bolster national revenues from its most valuable natural resource. With the global diamond market facing challenges, this strategic deal intends to secure financial sustainability for Botswana while ensuring collaboration with De Beers.
Original Source: www.thespec.com
